Further Reading

Gaming giant has been on a wild ride in just 5 short years—while losing $600M.

“I don’t want to jinx myself and say I’m only going to produce hits, but that’s the goal,” Eric Schiermeyer told Ars during a hike overlooking a cloudy but gorgeous beach roughly midway between San Francisco and Silicon Valley. In recent years, Zynga has produced plenty of weak titles and has lost ground to rivals like King, which makes the immensely popular Candy Crush.

The entrepreneur has been relatively quiet since he left Zynga. Schiermeyer popped up last year as an advisor and investor to BeeCave Games, whose CEO was a former Zynga colleague. Now, he wants nothing less than for his company to produce the top-selling mobile game.

Schiermeyer’s new company, Luminary, has just seven employees and is currently funded entirely on his own dime. The other employees include a “seasoned team of Unity developers” including Amir Ebrahimi, Ari Brownstone, Marco Rizzo, and others, who previously ran Luminary Productions, a self-described “Unity SWAT team” development studio.

The Unity game engine has found huge success among game developers as it can target Windows, iOS, Android, OS X, Linux, PlayStation 3, Xbox 360, and more.

The Zynga cofounder expects Luminary’s first title, Greedy Goblins, to be released later this summer. In a quick demo on his iPhone, Schiermeyer showed off the game, a “runner” that he likened to being a combination of Subway Surfers and Clash of the Clans.

Good things come in small packages

It's no secret that there's a lot of money in video games: Gartner Research’s most recent quarterly report from late 2013 estimated that the global video game marketplace would grow 18.3 percent in 2013 and would reach $128 billion by 2017. In particular, the firm estimated global mobile game revenue to top $17 billion in 2014.

“By 2017, in-app transactions and paid-for downloads will trend in the opposite direction, with in-app transactions and paid downloads holding a 48.2 percent and 37.8 percent share, respectively; ad-revenue will grow but remain low at 14.0 percent,” the report states.

Unlike Zynga, which grew rapidly and enticed new employees with stock options, Luminary will offer profit-sharing to all, which should put a break on the company’s expansion as each share will diminish as new employees are added, Schiermeyer said.

“We hired too many bureaucrats [at Zynga]. It bothered me that we did that,” he said.

By comparison, analysts told Ars last year that Zynga needed to reduce its staff of 2,000 by half to increase profitability.

“We have a straightforward promise to the employee,” Schiermeyer said. “A straight line to a goal: The goal being that we want to make money.”

It’s good to be King

Schiermeyer has an uphill battle.

“Game companies come and go, so anything is possible,” Brian Blau, an industry analyst with Gartner Research, told Ars. “King is already big, so it's unlikely that [Schiermeyer’s] new company will trump King anytime soon. But a person with experience like [Schiermeyer] in the game industry stands as good or better chance at doing very well.

"The idea of profit sharing is great, and that could be a great benefit for [Schiermeyer’s] employees, but if there are no profits... or if the profit situation is unclear or changes unexpectedly then that could actually create varying types of expectations and outcomes, and that wouldn’t be great for morale. Technology companies typically rely on a variety of compensation and retention methods; people do need to eat and pay for houses and cars and families so I suspect that [Schiermeyer’s] company will need to have a mix of profit sharing and more traditional compensation, as well as a plan that can change as company goals grow over time.”

Other analysts say that taking down the big dog of gaming like King is “not possible.”

As Michael Pachter, an analyst at Wedbush Securities quipped: “My new fast food burger stand is going to topple McDonald’s.”